Synopsys (SNPS) 5 Dec 182018 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Synopsys Earnings Conference Call for the Fourth Quarter and Fiscal Year 2018. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] Today’s call will last one hour. Five minutes prior to the end of the call, we will announce the amount of time remaining in the conference.

call recorded. today’s reminder, a is being As At conference President over I would of turn the like to to Relations. this time, Investor Lisa Ewbank, Vice Please go ahead.

call Geus, Thank are Chief Financial Synopsys; Hosting Good you, Pham, the Laurie. and Trac Aart and Chairman de Officer. co-CEO of afternoon. today

during financial regarding will we targets discuss Before that and I'd results. the this of other to like course begin, statements company forecasts, its and conference everyone forward-looking remind the call, Synopsys

best current as to our that about future actual While and expect. performance represent these actual subject differ uncertainties judgment results and what we risks of results results statements from could cause and our today, materially to performance are many

factors our affect described that results are In release. recent earnings most future may highlight to addition risks important that our in any reports we press and SEC today's call, during the

refer In found today and Reconciliations directly that earlier their and most discussion. addition, financial financial we financial we can the financial supplemental will measures supplement X-K, press during released detailed release transition to the we and which the long-term financial earnings will morning financial financial market around file information due information today. adopt GAAP which Also to tomorrow QX, comparable to the supplement in non-GAAP measures in ASC closure and our the our included to will XXX, in of we is objective. be

are website available All of our presentation the these on investor plus synopsys.com. recent items, at most

de Geus. the on over Aart the With turn site In that, call prepared addition, at the be the call. conclusion of will the remarks posted to I'll

record year mark fiscal we with quarter, of strong growth. non-GAAP Good billion with another and per $X.XX, crossed and the double-digit afternoon. for I'm an excellent report both billion of outstanding XXXX, share to revenue earnings delivered results, $X.XX $X with In Synopsys. pleased it,

$XXX Our $X X by backlog billion. to grew year million approximately

through our million We was very groups comprehensively stock good with geographies. across $XXX Duck. all long-term all Black made growth, to acquisition targeted business repurchased investments and organically and of of drive product the and Our simultaneously strong growth also

into combined we annual content, a diversification of Trac some increasing revenue very XXXX progressed in growth, connected market position, quality market, in period financial "Smart our TAM more AI-powered complex fiscal results is would and as execution a The financials software excellent $X.XX and world where systems, Notwithstanding billion of financial unparalleled the technology the long-term turbulence we're will strong discuss Our and on, enormous highlight we share in age Synopsys software launch strong year pass the envisioned security mark. well the detail. X Everything" expansion with for Synopsys. innovation, of a and chips Early objectives. electronics.

as there and of we from flowed critical of to software. shifted gravity the hardware intersection our strategy Our center

but targeted advanced new at at were a investments software platforms Our and EDA solving broadening not business aimed our tools portfolio at security mission-critical IP only entering challenges. high-impact and

Our vision be in and execution out position. us our excellent an turned point, on puts to

a very upgrade early stream stages multiyear a and grow margin and aimed system driving delivered our three, squarely each growth me our in these, inevitable of Integrity, cycle. and complexity. prudent excellence we Notwithstanding further base with profitability, management. complex continued sustain drive EDA chip Software most driven growth to the continue In moving EDA. to billion leadership, at revenue XXXX, those of products two, scale solid EDA phase our threefold, $X through growth multiyear towards growth diverse while and from a semiconductor steadily in are substantial operating operational innovations the enabling that through expand context, is by designs and of on customer expansion continued look we IP is As market In and next ever, the beyond, beginning expense strategy and let and technology swings of one, market, to

performance or with advantages digital years of Specifically, elements their in a across growth us to enabling new platform. the tools design product in engines our a revenue several highest synthesis, route generated data our of model all across place for word and captures design our measurable These fused productivity and single very The optimization strong now fusion Fusion customers. signoff, improvements share for boundaries. results

massively we result we built in promise numbers. design and The and XX% shared Compiler, and concept functions, great route are going While fewer and formally capacity with performance. on excellent between single with market a simultaneous the capability standard product such elevates unified new in we iterations, demand Through different Socionext improvement have significantly platform Customers code we Samsung, last results, tools. elements need Most synthesis, significant to of key a the synthesis Fusion for of engine notably, introduced reported brand-new data March, the two effort, quite on and move a Toshiba, the already the up, the multiyear place our our it in and the see with powerful, the integrates quality ground signoff design in upgraded that fast as Fusion launched model the the Built month. Xx with These along impressive among Fusion higher notably results. development technology. time others from products forward. resulting gold only is combination to

a another too, our distributed even Stay XXXX. faster tuned of performance franchise For growth share be gains. use Xx upgrade, delivers Design boosts NXT, more year Compiler Compiler customers synthesis for product runtime and out which to and Fusion-related separately, had further. outstanding during we who significant Verification, Design that cloud-ready capabilities also rolled launched

the our and others, fastest of system, emulation only built another technology new developed which the of Across today's been the We of utilization. the automotive, area to is is big-volume available, delivery semi In verification seek fastest, leader. Particularly way the the emulator which broad small highly making software leading have verification, Server launched is tools some which wins hits for bottleneck not hardware-based itself trends, early and from integrates all spot customers. exploding helpful us requirements IoT, chip sweet validation. XXXX, biggest of Verification platform, the customer the simulation periods Customer based accelerating market-leading market but large capacity X, significant of state-of-the-art AI Emulation customers software cloud, to including largest importantly, system capacity available record generated ZeBu has board, sufficient as competitive Continuum that companies very to enable peak saw to and drive a With and systems AI aggressive startups. quite bring-up chip our an relationships. but on these today. It only not systems. during the year, complex we large, to they impactful verification has been hardware and we've lends the number compute success ZeBu

launched in many While we we cloud tools with and Alibaba EDA officially summer, hosting a have Google broader including solution for years, public Azure, Cloud. offered partnering cloud providers the cloud for Amazon, Microsoft

that in sustain strong for expect growth will solutions. demand our We complexity continued

to had revenue. of semiconductor growth, We total excellent slightly reaching than IP. at Turning another Synopsys record more year double-digit levels XX% of

IP. broadest libraries, years, embedded Over XX logic and built security interfaces, of portfolio the and processors memories, we've the plus highest-quality past

has subsystems high-impact evolved now offering state-of-the-art, leading-edge serving customers. and cost-effective market blocks sophisticated from Our building being to initially

autonomous more driving. XG this cutting-edge than verticals is Nowhere like in visible cloud, and AI,

with AI example, processors, for processor in XXXX, very stringent products. at vision including standards. imaging embedded targeted our digital chips drones, notably good growth applications, safety and surveillance Today's must innovative ARC reliability generated automotive meet Our and functional

embedded of infotainment, XXXXX-certified and microcontrollers Over broadest the IP for the ADAS, portfolio past several ISO years, we've developed more.

MIPI, high-speed unmatched Our of to IP portfolio to and DDR, SerDes more. ranges from USB interfaces PCI HDMI, Express

far high-quality all We X-nanometer broadest blocks by are processes shop one-stop to the for down key below. and in manufacturing

expect strength our going new forward. designs, most we IP As continued customers their trust demanding for

a opportunities. While to ahead areas, in fortunate we our continually Synopsys number evolve is to emerging lead stay of of strategy

ago one and to being that constitutes but In new the Our organic is almost and code built market, cycle, new that prime solutions address in Through we and a while Software early vulnerabilities a position, adjacent entry nicely Integrity development quality written. is acquisitions, a we both of example to EDA is new defects have identify software this. this years is to investments TAM. offer market security X major key also

of services, and is and to fragmented designed For creation, we key with Cigital a medical customer Synopsys, market, Black Duck, and which verticals high-growth have a and customers. customers, cross-selling Software financial has enabling in XXXX, industry successful recent that for developers base, our robust streamlined, deliver highly delivering In what automotive in to such software very comprehensive as significantly engagements high solution increased more been Platform, our value reaching Integrity diversification in demand means been devices. strategic provide brand recognition. acquisitions, a plan The most high-level

roughly while reach our towards fiscal to progressing poised Software profitability. Integrity is revenue in of total 'XX XX%

manage and in to its are about business We we'll way evaluating things the few a QX. Rounding the comments out, and best report economic make landscape. decision the a results,

Following analysts very revenue modest through prioritize a customers Design phase. activity, business growth Learning growth, in forecasting from the X continues industry, electronic years however, more are semiconductor all experience, cycle. strong of albeit the at continued design parts unabated. of

bolstering entrants business Furthermore, the a electronic AI in great diversified in and aimed model confident outlook. customer growth With of directly financial and complexity augments confidence we're vitality exciting revenue and critical our products a many are world, position our that portfolio at feel of in verticals, challenges and addition, new our recurring demand solid momentum. deal continued the sense and for the most foundation, In of base our new services solutions.

of of to non-GAAP growth profitability IP number over a We to confidence. was across for partners the year in all our financial We're growth, continuing for on leveraging earnings double-digit scale poised and geographies. years. strong investors delivering As revenue game-changing excellent we're double-digit with and and revenue software delivered with for fiscal to a raising hard products security. support thank closing, growth the Synopsys. next pipeline want and the EPS our strength an product non-GAAP I work, a all and cores EDA, in next and drive intent new of customers, result, several ambitions phase groups their employees, XXXX In advanced

Let over to me now turn the Trac. call

long-term echo also Good date, across strength non-GAAP an our and portfolio, the afternoon, to investments To everyone. $X contributed saw we revenue growth Aart's the diversification. only was our delivered and throughout strategically. did our to of targeted a report record geographies These double-digit Aart. board. operationally and we surpass investments Not Thanks, growth. but what best through and we had year to each sustainable earnings on initiative outstanding comments, drive strategic mark billion multiyear We financially, our year generated

momentarily. to phase raising confidence, which this financial next reflect the enter describe To prospects. in long-term greater we're $X we detail objectives, we our and look long-term in billion, As are confident our I'll

of will quarter $XXX fourth the reflecting fiscal XXXX review of QX generated revenue comparisons total I'll unless We I results. year-over-year, the and specify year, billion in and First, $X.XX otherwise. XX% XX%, All respectively. be of growth for million

backlog million to year. and more Total to investments along $XXX while GAAP the the in $XXX cost million This the respectively. which non-GAAP and for items, seen for detailed and made our million year debt year, recurring of bringing per We Non-GAAP revenue than was costs in to for for as with XX%, for the this in million with $XXX are enterprise quarter predictability and year. $X.XX Our and quarter supplement. $XXX the begun earnings total increase were of strong completed $XXX to companies. million business $XXX $X.XX $X.XX GAAP share X year targeted for level share buybacks year, $XXX margin grew often billion which onetime of $X.XX our the share $X quarter We the million quarter balance earnings million and of $XXX were flow software year. expenses the accelerated levels were operating our with operating the the in stability Total due historical cash were to non-GAAP strengthen ended for a was in billion an $X.XX XXXX. expenses financial The earnings of for growth. $XXX and million the of our model, generated per million We year. not provides a XX.X% for billion, the the for deliver $XXX further resulting below May repurchase XX% to total and continuing quarter approximately the year $X.XX cash million. we

share Over the last X years, billion by the we've our of count $X.X X reducing repurchased million shares. stock,

of on high plan for Group. also at Black to Black end Black cash We than used at remains with of dilutive and second market Integrity acquire half Duck, track open-source the Duck our $XX leader in million to was on slightly XXXX. $X.XX our adding the the to Duck Software came breakeven in security expected less revenue our in approximately we XXXX. testing

largely of profitability. growth, million Now Software in no that report results. the progress Integrity scale will Black approaching maintained has Duck its business integrated, rapid acquisition pace individual is The longer reaching solid and we XXXX its towards $XXX sufficient approximately combined to

we're to visibility and provided change, how the going operations the this evaluating Given forward. to best investors manage

a decision make will We QX. in

Before moving discrete referenced to operating that outlook, earlier year. note summary in a of supplement I'd to this and financial our quarter our certain we've the items like that includes

not is we to will accounting to cash XXX. our how description Turning It's the now brief to affect ASC that from - an expect note this a start business. of what manage with only to or guidance. transition ASC I'll important and for XXX generation transition while

the revenue for see IP Under revenue impact XXX be when these with quarter-to-quarter respect were the now delivery associated largely timing recognized license unchanged, contribute an to total are will will contracts. the no contracts impact non-cancellable over in the with While will recognition This of change to rules, on rest of but has greater the we ratably. IP rules, Under our business a request titles. effective time, customer the remain of will specific revenue. contracts recognized still recognized value XXX revenue of multiyear but contracts variability the the

of a there's of rules. new be been XXXX under under XXX directly our in our recognized under that a this portion the XXX backlog cause During retained transition and will have recast This rules XXX as would beyond year, onetime to backlog rules. earnings recorded

in to of to XXXX We reduction impact $XX neutral X within to expect with million, the result revenue ASC XXX years. transition declining to a the approximately

details on contains transition Our financial ASC additional to XXX. supplement the

to reflect strong implying a increase me over some margin billion outlook an to approximately extra to to are fiscal $X.XX share, earnings with These to XXX an for operating is at double-digit just per midpoint $X.XX comparisons our $X.XX share, XXXX. non-GAAP and X% the XXX $X.XX XXXX of an the be official with another XX%, increase X% of Under of apples-to-apples be basis earnings of GAAP year points. numbers moving billion, or non-GAAP $X.XX X% XXXX, communicated. year excluding with approximately let ASC solid Before targets and financial under in and rules. growth earnings week the expected consistent now ASC under the for will margin provide revenue provide expansion, for guidance XXX, $X.XX to per first expected full our previously XXX objectives quarter official we've I new rules. between

$XX normalized between $XX $X.XX between $X.XX approximately expenditures offices. non-GAAP are, from non-GAAP and between XXX facility per earnings a some operations million the Valley expenses million, in the $X.XX full million, million expenses of of per between share, non-GAAP approximately to to cash total at China non-GAAP the other relocation and million. and earnings to operating million income a build-out includes in and $X.XX of of XXXX, share, of tax $X.XXX XX.X%, cost and minus billion $XXX a year of million, of margin This Silicon $X.XXX and midpoint GAAP billion, XX%; $X.XX flow expenses $X.XX resulting XXX $XXX For shares targets billion, capital and GAAP billion, total cost outstanding and of approximately $X.XX of and rate $X.XX billion revenue a minus

CapEx roughly in in expect We half XXXX. drop to

double-digit outstanding million, financial million, share, income $X to now setting revenue million, on operating objectives. growth million drive double mid the the $X of XXX million XXX $XXX of of expense Software of prudent XX%. an normalized EPS single high cost close per earnings revenue expenses rate revenue total of $XXX the GAAP digits XX% a of to $X.XX continued million between non-GAAP position to tax we've growth other growth at $XXX non-GAAP of scaling to of to XXs We in with Based Integrity share. $X.XX between mix intend expenses to across high accomplish earnings million, digit annual $X to strong and our long-term $XXX around consisting are goal and expand management non-GAAP a cost a expenses to non-GAAP targets XX%, time through shares over $XXX GAAP total of a to million, goal mix to this between margins per with Simultaneously, minus million through are, and we between and single first $X.XX high digits, the IP For and by low I'll Integrity. we XXXX. portfolio, $XXX and update and Software to minus growth, the the the built systems non-GAAP total and million EDA plan between quarter,

beyond. Our of To continue through we've in wrap revenue. it billion $X out business today over out for with year growth to a the quarter buybacks. and and the laid updated reflect toward is XXXX that, The our confidence the questions. financial investments we Synopsys. capital great And for to I'll on allocation operator deliver organic made, well strategy as balance to decisions ability turn Because strong up, remains of a move of closed path we this investments, M&A objectives and this profitable positioned

Company. line Instructions] question, ahead. our [Operator Mobley go with of And Benchmark first Gary from Please the

as long-term in out And Thanks run EDA through 'XX embeds outlook of fiscal you for should of businesses, most assumptions. everybody. given my growth. though of organic, that this appears the year growth. that your business have parameters conservatively? revenue question. for growth say, looks I X% the evening, growth It the your for to all, was EDA revenue EDA I if wanted other given XXXX believe churned consistent - that like about I product of some X% taking some Good your I about category. with assumption other not it too Am reading But you just

I conservative, think that is indeed. too

of given that sorry, a we're we are more has And so upper little all We in 'XX, actually 'XX, cautious multiple that, market fact the in mid EDA so have, little the sits bit and a in more did the healthy turbulences businesses. of market - well 'XX did well teens. Having in to course, cautious predict bit we to predicting said all feel in the that quite uncertainty. half been the and the

think, I judge the But than can to. a what one So certainly higher yes, numbers referring bit. little you it's are

Okay.

Just the excluding Software and for verify, roughly to year design was, Group the $XXX 'XX? Integrity IP fiscal million what,

million. $XXX

a I that something okay. about revenue - for about $XXX percentage in going year backlog And X XX%, of percentage X function else Software of to revenue million, come of your of is the see Is points is the fiscal that of IP shift towards been Integrity? 'XX your last Or there? percent had revenue each years. on dropping forecast out there

partially that. related to is It

over hardware change of you of see the back IP, and a in you'll which growth time, higher mix has to model element look an of as If upfront be more result that which tends - upfront.

strong that year, the quarter, And of the actually that the so did timing a affect had this that the slipped out reflected There backlog, we we can billion some were of reported. you bookings $X backlog For in deals that see percentage. year. very

sheet, notice from you. you to in it the did you and year-over-year. revenue from way as item would showing is you then delivery, increase? I start up change the on any speak as appears gather is cloud-based the you're that though And that Thank about questions. revenue two twofold recognized expect that? inventory balance as Could well, Last to inventory

and your need the inventory the I question yes, of is, the support reporting when are missed timing of part hardware. part So do of the the we demand that's first to of hardware and levels, customers second question.

EDA compared speak as then year recognition, you if this can reason cloud-based your and inventory the increase impact tools in twofold to revenue time for delivery the last at well, all? to So of how may the

traditionally recognized has affect won't is shipment, been recognition. Hardware which upon revenue it typically So upfront.

XXX. under the And function that see mentioned previously, the buildup of inventory hardware in the I just to a continue as we'll in business. So growth is

Operator, can next we get question? the

Needham Please Rich next go the line go of We Company. Yes. with ahead. Valera & to

Thank on you. A questions group. the Software Integrity couple of

talk recently? Integrity on Software be than about expect talked think First, Integrity, then fiscal overall Aart, sense you. I been the call, different in last deliver might being a when that drag a in also about delivering will perspective how what earnings 'XX. on corporate 'XX? expecting any you we of you can be platform you to Can and that And fiscal Software business you've from XXX what point drag margins you're us give Thank that basis

the The platform delivery XXXX. of in Sure. is scheduled

in alpha And versions. on people like is years. all have have realize specific not Integrity software number dates. a have of a existing using few last pieces. thing Software we platforms fairness, multiple while delivered a We the to been of too already of it group, lot exact The acquisitions the that we the into inside But in over also of number we have developed get made

integrating are a have so view. is so to customers, witnessed, that can they of representations broader, navigated looking same solutions of easily to by from more data fit statistics one product And I a in a that the And them visiting from in larger desire actually number and and be at the another that sufficiently mixture those seamlessly the point the or simultaneously, have modifying platform. the interfaces, of same acquisitions management it of personally

the that that platform And so is taking. is the direction

demand. have we broaden this while the great still in is hopes that to are products with appeal So quite market our way good individual racing forward a that good

Software margin for investments the operating because point in margins Integrity. roughly overall the XXX XXXX, on this basis to we year see impact question, in regards did with So of

on you willing Or anything 'XX? at not say point? are fiscal this And to

the should Generally, board the across improve in business XXXX.

hardware could, And Okay. business. just I the one if on more,

realizing, because those strong growth but were us of relatively the years hardware looking you've off but business for volatile each what you're of of volatile you a you're by entering X as fiscal So very Can coming looking hardware, give out you 'XX, entering of there? noted, it years, environment of one, growth tough pretty two, just a effectively sense that surprised comps, of and sort demand. flattish in is believe pleasantly got strong for nature were I from you very

It feels because downs repeating - which a do like believe good shipment business they they just the larger what you yesterday. a typically come I abrupt always said, cautious want bit the we're and reason, can is, in because ups customers be in for hardware orders. And when and

problems And software which right you yet, a i.e., suited these on that's be down, a by can business, on that the answer prototype? it so can becoming not up run you things. for is, that At because of and are more for of emulation run a this was economy. can it sits difficult, time, the go can lot is set hardware ready And well of genuine impacted same yes, intersection the at is it my

interest. course, very that's where expect we And caution But years hard completely well we continues. over it's last and well, do will predict So the the hope to continued just of there. X that we

Thanks great. for questions. taking That’s my

welcome. most You’re

with We to you. Sterling go JPMorgan. next Please ahead. go Auty Thank

for guys. is Thanks, on tonight. Great. Sterling Ader This Jackson

into far, these China in center or company this the of quarter there China, impacts First in either any seen days. front contemplated in side with impact much headlines terms so and your facility developing XXXX And in question business the anything a from pretty have with outlook? our is China, you

seen The answer any we is not no, have impact.

discussion. rest 'XX But well we in and 'XX all area growth world. same back China an as course, have a for stands also At attuned as diversified certainly we are growth. tension we of well in in the Of quite China, the the but the - done forth time, the extremely out in us and of at have good

And essentially are control. of are the be can external perspective, a they things we continuation, planning if course. from changes, that beyond there so we tend that to But

million the no reason a repurchase was follow-up. There particular then that? And $XXX authorization, quick remaining under activity the under Okay. for any

Sorry, complete the buybacks did in $XXX for we total million of year.

In quarter? In the this particular quarter? last

We Yes, our ASR. we did. $XXX million completed

enough. Okay, fair you. Thank

Vleeschhouwer the Your of go with Jay Please next question Securities. line ahead. from Griffin

at II Aart, that, the Good looking in digital, Fusion a ICC now how Compiler? the impact, adoption business absence logo about business on talk could want if that impediment Fusion we the to of in been see So language terms to the new of existing with perhaps business stipulate an are thinking respect kind evening. that you're or in increment of new some you. to potential could customer Thank from use the Compiler, vis-à-vis terms adoption? you you you of that to back perhaps have your it's benchmark, that as acceleration about business? degree, how may, And architecture you an thinking of think that do available, you digital the

me two the products I formulate really some and acceleration, than in preamble. it introduced is the of solidification seen the think the and differently news already good maybe let Well, we've platform. We

version was The first next synthesizer. actually a of product the

things. we or releases methodology, And For when that They of very better existing new they don't a same will an change the immediately those that a result. adopt follow have that have adoption next version fundamentally have design that people fundamentally want much to adoption new has releases we products. can

For that that we Fusion have while have and that as product handholding transition quite make our quite But all so integration advanced, it Fusion the with simultaneously well. are the because high the sure makes Compiler, And there, quite that in products really reaching deep number multiple we looking results adoption, early the customers is we it is phases of of is new good. adding call in it, hopes that sufficient are are of that that there a we technologies. beyond or

many over advancements. I rolling and algorithms line bottom we different the ability will will look we fundamental why basis That's data So tools. the this the capabilities as to match was for have add time, next really the there mix that decade more representations Fusion platform value all of and mentioning as that of the is to be at of in now

industries and/or With perhaps entirely terms computing respect you technical have financial software, and outside growing tied semis the mitigating your systems. other electronic or variability that services for new thoughts EDA? solely where to on simulation deploying in in any to HAPS solvers industries requirement run wholly for example, TAM, non-EDA its in or of aren't and/or like given high-performance example, other hardware ZeBu hardware you to just types Meaning, could of

have very is of would of truly segments caution that. on machines success accelerate thought market can where one focused that that for definitely reasons we platform Yes, massively. about things they to these be tend I the you invariably

And there's so absolutely the ultimate acceleration, number application. algorithms is of a in would that, we lot existing AI a do of value. algorithm, we of that domain between create areas a speed the trade-off could domain what change. midst exploring Having And are the to the of of of the and of said domain the generality see the always

we talk that early the I think lot have we're specifics. a and to of I about opportunity now, bit it's forward think But what there. see market right have, a with in we we racing

EDA? increase assume in largest, some there in of one not also I for the which increase, largest backlog Or if that was backlog backlog, large the you've SIG? had, and/or the predominantly on IP in Lastly, increase be appears was to

board. the across was increase The

you… thank Okay,

Maybe are if of started frame, time a of SIG larger a is market so of well. think is I with of that And from but that to of the business. of longer business could that the maturation our very one add contract. And is not as that, maturation much and moving what we initially very degree sign a to gradually quality characteristics of short the some doing of I

that and encouraging, And the extremely at applies by - Synopsys. so in the and board way, sense is so really this, across that

you. Thank

You’re welcome.

to Please Garg Thank Monika next go you. ahead. We KeyBanc. with go

Hi. you Aart, you Thanks is Maybe digits about mid single my high growth low are taking what targets? walk these for core to talking question. leading you could now first, Generally, target. raise previously have raising talked to about mid-single you your you're digits. EDA to to through

algorithms and AI a seen is lot industries, have on as vertical going very Well, electronics is we've of the intersection the a the that electronics that to of reason fact or big impact. banking,

architectures of with design. the amount of on aggressive focus high. expect we that, And so and very of And design continuation is multiplicity the

ago. complex Secondly, more these than years seen much we've X designs what are

so stay advances, tune are to companies can And that. continue we the with in be that and a those opportunity sense, the these of for certainly intend for that and will in position in market leadership

So in general, confidence the is positive.

so semiconductors we In pricing in the a in that or good counter feel the of are to question And balance, for year. you position. somewhat volume next we that being

of the Integrity, for that XX% All could question still talk on Software profitability growth SIG right. Are next Thanks. XXXX expectations you you in what a expecting about are for And One year? growth. in SIG?

we're think on good that we on are those trajectory the growth, we on. a have we on good yes, definitely numbers, and Well, that aiming of at the comment shot Any continuing profitability?

Overall, profitability as scale up business. to improve we should continue that

In the the having we focus move overall gave mentioned are preamble, that margin to the numbers that you. a we we ops to

our of sure businesses, that the and get make all has we'll there. target GMs includes to one that a every so And

All slowdown one right. which we semi in been for question one is industry. seeing are The a last like we me, the getting have

So seeing any you this? are impact pipeline about you from your talk you. Thank Could visibility?

Well, to invest from a weather. of tempered make that's the are semiconductor in they and the to efforts fact new and immune seeing products ups actually to the And we engineering of downs, be order but that not the greatly or the that - well some by the downs market. due differentiate situations, we're because more companies continue, industry, many in may challenging size ups expectations good I in bad sure any is what in business our of partially we're and think not overall impact

the think sense, in EDA a has chips of So downs and ups in general I the other lot that And see well just of done designed. that situation the the being industry. practical in then we is

so much. you Thank

welcome. You’re

go next question Thank Capital Gal you. [Operator Please from Instructions] from Berenberg Munda Our ahead. Markets.

much smart is mobile? simply, a Hi, vendors. It's smartphone relative beginning, if connected how the environment frame connected maybe IoT of regards that the It's early guys. IoT my understanding what was? Can other smartphone is to and device, In Joshua everything. world put was Gal. bigger the for a of smartphone of driver smart everything you to the the on a connected opportunity the big in EDA days become you just relative words, world you today's a device will emergence it In state to the of Tilton for design mentioned connected

You have a lot question. of questions in one

them me lot interesting extremely those position really other. applications call a then of mobility a are applications on mostly has what the first smart each with that Let connected that meant smartphones, meant. of And yes, and we phone course, but

that reflective Facebook see time restaurant you information, word the to apps to more phone. about GPS That as When embedding the being really we give smart of able word the now you the do so on. And capabilities talk was refer AI or so smart, technology. on a of we that and such many of first

on with And you before. seen would so a that. I of that's one that can has not degree that reasoning is of a And hand, continuum, agree say been course, and

On goes is AI the very is too computation also highly power. using sensitive view, much hungry not and other hand, for from a technology specialized, that the to of more point with computation

only this it's Well, so be that order computation, faster which additional that that, drove is push and before power. battery-driven. fast to chips portable true it are chip XX have year, will it time, had in phones design low in AI also we And and want therefore, low additional And the they mobility people in an the design do is power this demand years succeeding that computation. that previous of because because context

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it's we large continue so expect companies, see system we in startups And because that feel and so dynamic But very us. it very techniques to can companies, large AI investing a industry. of number for very and a

Thank you.

welcome. You’re

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strong understand company back the market is looking that so many The in. very are you X the to are years, you closed and on appreciate a including listening we driven, that I future good in have and Well, of a must last promise, and has towards we so be XXXX. many so changes we and will classic, us made we, Synopsys technologies anyway lot drive, have put to in of let diversifying and also TAM to working it, a broader a that call me continue investing position, the speak.

in And transition Year. so a have we New results and hope to good the you you we Thank much. good able into very be continued we share that hope XXXX, will

Thank will teleconference and for you Ladies gentlemen, and for this Executive you. We AT&T participation conclude our for thank using today. your Teleconference.

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